The loans that are distributed for the commercial or industrial purpose and that help in foreign and local trades are called commercial credit. Bank provides these types of loans from its own fund.
Commercial Credit is the risk of loss from providing credit to corporate counter-parties. Extension of credit can take the form of direct loans and contingencies/ Risk guarantees. Issue of short-term notes, without any underwriting, representing a Commercial Paper (CP) promise to repay the amount at a specified future date.